What is the purpose of the Hck Hot Chicken System Protection Agreement?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
to comply with all of its applicable post-termination or post-transfer obligations (as
the case may be) in the Franchise Agreement described above.
[FRANCHISEE] FRANCHISEE'S OWNERS: (add more lines lines as necessary)
EXHIBIT I-2
HCK HOT CHICKEN FRANCHISE
SAMPLE SYSTEM PROTECTION AGREEMENT
This System Protection Agreement ("Agreement") is entered into by the undersigned ("you" or "your") in favor of Hot Chikn Kitchn LLC, a Florida limited liability company, and its successors and assigns ("us," "we," or "our"), upon the terms and conditions set forth in this Agreement.
1. Definitions. For purposes of this Agreement, the following terms have the meanings given to them below:
"Competitive Business" means any business that: (i) sells or offers to sell products the same as or similar to the type of products sold by you in and/or from the Franchisee Territory (including, but not limited to, the products we authorize); or (ii) provides or offers to provide services the same as or similar to the type of services sold by you in and/or from the Franchisee Territory (including, but not limited to, the services we authorize), but excludes a HCK Hot Chicken business operating pursuant to a franchise agreement with us.
"Copyrights" means all works and materials for which we or our affiliate have secured common law or registered copyright protection and that we allow franchisees to use, sell, or display in connection with the marketing and/or operation of a HCK Hot Chicken business or the solicitation or offer of a HCK Hot Chicken franchise, whether now in existence or created in the future.
"Franchisee" means the HCK Hot Chicken franchisee for which you are a manager or officer.
"Franchisee Territory" means the territory granted to you pursuant to a franchise agreement with us.
"Intellectual Property" means, collectively or individually, our Marks, Copyrights, Know-how, and System.
"Know-how" means all of our trade secrets and other proprietary information relating to the development, construction, marketing, and/or operation of a HCK Hot Chicken business, including, but not limited to, methods, techniques, specifications, proprietary practices and procedures, policies, marketing strategies, and information comprising the System and the Manual.
"Manual" means our confidential operations manual for the operation of a HCK Hot Chicken business, which may be periodically modified by us.
"Marks" means the logotypes, service marks, and trademarks now or hereafter involved in the operation of a HCK Hot Chicken business, including "HCK HOT CHICKEN," and any other trademarks, service marks, or trade names that we designate for use by a HCK Hot Chicken business. The term "Marks" also includes any distinctive trade dress used to identify a HCK Hot Chicken business, whether now in existence or hereafter created.
"Prohibited Activities" means any or all of the following: (i) owning, operating, or having any other interest (as an owner, partner, director, officer, employee, manager, consultant, shareholder, creditor, representative, agent, or in any similar capacity) in a Competitive Business (other than owning an interest of five percent (5%) or less in a publicly-traded company that is a Competitive Business); and (ii) diverting or attempting to divert any business from us (or one of our affiliates or franchisees).
"Restricted Period" means the two-year period after you cease to be a manager or officer of Franchisee's HCK Hot Chicken business; provided, however, that if a court of competent jurisdiction determines that this period of time is too long to be enforceable, then the "Restricted Period" means the one-year period after you cease to be a manager or officer of Franchisee's HCK Hot Chicken business.
"Restricted Territory" means the geographic area within: (i) a 25-mile radius from Franchisee's HCK Hot Chicken business (and including the premises of the approved location of Franchisee); and (ii) a 25-mile radius from all other HCK Hot Chicken businesses that are operating or under construction as of the beginning of the Restricted Period; provided, however, that if a court of competent jurisdiction determines that the foregoing Restricted Territory is too broad to be enforceable, then the "Restricted Territory" means the geographic area within a 12.5-mile radius from Franchisee's HCK Hot Chicken business (and including the premises of the approved location of Franchisee).
"System" means our system for the establishment, development, operation, and management of a HCK Hot Chicken business, including Know-how, proprietary programs and products, Manual, and operating system.
- 2. Background. You are a manager or officer of Franchisee. As a result of this relationship, you may gain knowledge of our System. You understand that protecting the Intellectual Property and our System are vital to our success and that of our franchisees and that you could seriously jeopardize our entire System if you were to unfairly compete with us. In order to avoid such damage, you agree to comply with the terms of this Agreement.
- 3. Know-How and Intellectual Property. You agree: (i) you will not use the Know-how in any business or capacity other than the HCK Hot Chicken business operated by Franchisee; (ii) you will maintain the confidentiality of the Know-how at all times; (iii) you will not make unauthorized copies of documents containing any Know-how; (iv) you will take such reasonable steps as we may ask of you from time to time to prevent unauthorized use or disclosure of the Know-how; and (v) you will stop using the Know-how immediately if you are no longer a manager or officer of Franchisee's HCK Hot Chicken business.
Source: Item 22 — CONTRACTS (FDD pages 54–55)
What This Means (2025 FDD)
According to the 2025 Hck Hot Chicken Franchise Disclosure Document, the System Protection Agreement is designed to protect Hck Hot Chicken's intellectual property and system. The agreement is entered into by managers or officers of a Hck Hot Chicken franchisee. It acknowledges that these individuals may gain knowledge of the Hck Hot Chicken system and that protecting the intellectual property is vital to the success of both the franchisor and its franchisees.
The agreement aims to prevent unfair competition and unauthorized use or disclosure of the brand's know-how, intellectual property, and overall system. It restricts managers or officers from using the know-how in any business other than the Hck Hot Chicken business operated by the franchisee. It also requires them to maintain the confidentiality of the know-how, avoid unauthorized copies of documents, and take steps to prevent unauthorized use or disclosure. These restrictions apply both during and after their relationship with the Hck Hot Chicken franchise.
The System Protection Agreement specifies that failure to comply with its terms will cause substantial and irreparable damage to Hck Hot Chicken and its franchisees, potentially leading to injunctive relief. The agreement also addresses the potential for circumvention through immediate family members, stating that a violation will be presumed if a family member uses or discloses the intellectual property, although this presumption can be rebutted with evidence. By signing this agreement, the manager or officer acknowledges the terms are reasonable and waives any right to challenge its enforceability.